Question

How much principal is repaid in the 74th payment interval on a $142,300 mortgage? The mortgage is amortized over 25 years and the payments are monthly. The interest rate is 7.44% compounded semi-annually. Select one: O a. $574.16 b. $260.06 c. $275.16 d. $527.16 e. $572.16

Answer 1

First, let's find the monthly payment

N = 25 *12 = 300

I/Y = [(1 + 0.0744/2)^(1/6) - 1] * 100 = 0.61060287012

PV = 142,300

FV = 0

CPT PMT

PMT = -1,035.64551846

After making 73 payments we are left with (300 - 73) = 227 payments

Now we will find the loan amount at the end of 73 payments

N = 227

I/Y = 0.61060287012

PMT = -1,035.64551846

FV = 0

CPT PV

PV = 127,019.04202525

Interest amount = 127,019.04202525 * 0.61060287012% = $775.5819162051

Principal repaid = 1,035.64551846 - 775.5819162051 = $260.0636022549

Option b is correct

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